HKEX introduces new settlement acceleration platform Synapse

Hong Kong Exchanges and Clearing Limited (HKEX) has introduced HKEX Synapse, a new settlement acceleration platform for its landmark Stock Connect programme.

HKEX Synapse uses DAML smart contracts and will streamline the post-trade workflows of Northbound Stock Connect, maximising efficiencies for market participants in a transparent, secure and reliable way. Asset managers, brokers, global custodians, local custodians and clearing participants will be able to take advantage from the improved connectivity and enhanced capacity to handle the growing volume of trades flowing through Stock Connect.

HKEX has partnered with The Depository Trust & Clearing Corporation (DTCC) to link HKEX Synapse to DTCC’s Institutional Trade Processing (ITP) services. Global investors and HKEX participants will benefit from this integration and will be able to utilize central matching of cross-border transactions on the Synapse platform, automating the trade confirmation and settlement notification process. Digital Asset has been chosen as the vendor to develop HKEX Synapse.

HKEX Synapse will help institutional investors taking part in Northbound Stock Connect to better manage their post-trade operations across different time zones, in particular with regard to adhering to the Mainland securities market’s T+0 settlement cycle.

Charles Li, HKEX Chief Executive commented:

Charles Li, HKEX

Charles Li
Source: LinkedIn

Synapse is our latest Stock Connect innovation and will be of major benefit to global investors when they trade through Northbound Stock Connect.

Embracing new technology to further develop our markets is a cornerstone of our strategy and we are delighted to work together with DTCC and Digital Asset on this exciting new enhancement to our landmark mutual access programme with Mainland China.


Mike Bodson, President & CEO at DTCC added:

Mike Bodson, DTCC

Mike Bodson

We are pleased to be a part of this important effort to bring increased levels of post-trade automation and reduced risk to cross-border trade flows into China, leveraging global best practices. Our ITP services are utilized by thousands of clients around the world, and we look forward to extending the benefits of our offerings to users of the Synapse platform.

Yuval Rooz, CEO & Co-founder, Digital Asset said:

Yuval Rooz, Digital Asset

Yuval Rooz
Source: Twitter

HKEX is raising the bar for securities markets worldwide. HKEX Synapse solves a major business problem for capital markets that legacy message-based approaches have not been able to address. Synapse uses DAML smart contracts to automate, update and synchronise information across the market in real time – ensuring errors can be caught, exceptions can be handled and that HKEX Northbound Stock Connect can continue to grow at the pace the market demands.

DAML is a type of programming language used to build smart contracts. A smart contract is a computer programme or a transaction protocol which is intended to automatically execute, control or document relevant events and actions.

Institutional investors’ interest and participation in Northbound Stock Connect has grown significantly since its launch, especially following the inclusion of China’s A-shares in major global indices. The average daily turnover of Stock Connect’s Northbound in the first three quarters this year has more than doubled from the same period of 2019, reaching a record RMB90 billion.

Mainland China’s tight settlement cycle has developed the need for a more efficient settlement infrastructure, which HKEX Synapse will address, helping investors to manage their portfolios and their risks.

Through DAML smart contracts deployment , HKEX Synapse will be able to simultaneously create settlement instructions and provide status updates to all parties along the settlement chain, facilitating concurrent processing and greatly improving transparency for market participants. HKEX Synapse is an optional platform, testing is planned to begin in 2021 with a group of pilot users, ahead of production deployment targeted for Q1 2022.

Upon launch, HKEX Synapse will extend Northbound Stock Connect’s global reach through DTCC’s ITP services, currently used by over 6,000 clients across 52 markets globally.

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